Building Industry Year-End Review

Looking back to see how the homebuilding industry has adapted to, and overcome, the many challenges presented in 2018


As 2018 comes to a close, it is imperative that we look back at the many challenges the homebuilding industry has endured, celebrate where we succeeded, and make plans for further growth in 2019.

Affordability has been one of the growing concerns for homebuyers and homebuilders alike this year, especially as millennial demand increases in the market. The National Association of Home Builders/Wells Fargo Housing Opportunity Index showed its lowest score of the past decade in 2018, at 57.1 percent, as proof of this trend.

To add to this, in January 2018, Forbes predicted that the millennial housing demand would continue to rise. Along with the demand came higher demands for technology, sustainability, and affordability. Millennials are now between 22-37 years old, and many are ready to buy their first homes. Some builders may find this demographic challenging to sell to, as they feel they are competing with the entirety of the internet. While it is true that the majority of millennial buyers searched for a home online last year, according to the NAR Real Estate in a Digital Age Report, 74 percent of millennials admitted they wanted help understanding the purchasing process. This is excellent news for those trying to sell to this demographic — it means the key to the millennial market is as simple as communication about the buying process.

Today’s consumers are more particular about the features of their homes; if they are transitioning from renting to buying, they want it to be worth the commitment. In response to this, more builders are manufacturing homes with more advanced technology options than ever before. A variety of appliances can be controlled through different mobile apps—a relatively new home feature that is already in high demand, which builders are working diligently to meet.

Another recent change in the industry is the updated Title 24 standards. Going into effect in 2019, new standards will allow California to take the final steps towards achieving zero net energy (ZNE) for all new homes built by 2020. This is something California has been working towards for nearly a decade, and as the deadline for finalizing the process approaches, it is likely that other states will follow suit. Multiple states, including Washington, New York, Massachusetts, and Vermont are already starting to take action to move towards ZNE standards.

Sustainability is an important feature for all homes built this year across the country. As the modern buyer is more informed than ever, they want sustainable homes that are better for the environment and, of course, cheaper. LEED certification on new homes that meet energy and environmental design requirements are becoming more popular. Not only are they popular for the obvious benefits to the environment, but also because of their impact on the economy. According to USGBC, by the end of this year, LEED is expected to have contributed $29.8 billion to the Gross Domestic Product, and 386,000 jobs to the U.S. economy.

Perhaps the biggest change in the industry has been affordability, with lumber tariffs playing a large role. In 2017, the Trump administration imposed a tariff on Canadian lumber, arguing that Canadian wood is heavily subsidized, which harms American workers; conversely, American workers in the homebuilding industry were negatively impacted by the rising lumber prices. Thankfully, builders have found many innovative ways to adapt to this challenge as they are focusing on using less wood by implementing new framing techniques, turning to prefabricated housing, changing floor plans, and using reclaimed wood.

Although 2018 has certainly had substantial challenges, homebuilders have always found a way to adjust. A decade after the housing crisis, there are far more positive advancements than challenges on the horizon for the homebuilding industry.

Looking ahead to 2019, we can expect a rise in sustainable design, smart appliances, and LEED certified homes. We can also anticipate selling to a very informed consumer who knows exactly what they want from affordable, sustainable homes. Despite the challenges presented in terms of affordability, I believe homebuilders will certainly be able to adjust, as long as they keep the needs of the consumer in mind.

The year of 2018 has brought a lot of change, especially in terms of sustainability, and I look forward to seeing 2019 bring us even further.

Julia Edinger is the Editorial Assistant for Builder and Developer Magazine. She may be reached at

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